To introduce new products and processes, firms often acquire knowledge from other organizations. Drawing on social capital and transaction cost theory, we argue that not only is the impact of such acquisitions on the successful development of product and product innovations dependent on strategic and economic variables, it may also be contingent on the "knowledge characteristics” of the geographical area in which the firm is located. Combining data on social capital at the level of 21 regions with a large scale data set on innovative activities by a representative sample of 2464 Italian manufacturing firms, we find — after controlling for a large set of firm and regional characteristics — that being located in regions characterized by high levels of social interaction leads to a higher propensity to innovate. In addition, being located in an area characterized by a high degree of social interaction positively moderates the effectiveness of externally acquired R&D on innovation inclination.

Although biotech start-ups fail or succeed based on their research few attempts have been made to examine if and how they strategize in this core of their activity. Popular views on Dedicated Biotech Firms (DBFs) see the inherent uncertainty of research as defying notions of strategizing, directing instead the attention to the quality of their science, or the roles of boards, management, and collaborative networks etc. Using a unique comprehensive dataset on Danish and Swedish biotech start-ups in drug discovery this paper analyzes their research strategies. Adopting a Simonean point of departure we develop a contingency view on complex problem solving which structures the argument into three steps:
1) Characterising the problem architectures addressed by different types of DBFs;
2) Testing and confirming that DBFs form requisite research strategies, by which we refer to problem solving approaches developed as congruent responses to problem architectures;
3) Testing and confirming that financial valuation of firms is driven by achievements conforming to requisite research strategies. These strategies, in turn, require careful combination of multiple dimensions of research.
Findings demonstrate that Shonhoovens classical argument that "strategy matters" is valid not only for the larger high-tech firms covered by her study, but also for small research-based start-ups operating at the very well springs of knowledge where science directly interacts with technologies. Even though a lot more research is needed along these lines, these findings offer new implications for the understanding, management, and financing of these firms.
JEL Codes: L25, L65, O32

Although biotech start-ups fail or succeed based on their research few attempts have been made to examine if and how they strategize in this core of their activity. Popular views on Dedicated Biotech Firms (DBFs) see the inherent uncertainty of research as defying notions of strategizing, directing instead the attention to the quality of their science, or the roles of boards, management, and collaborative networks etc.
Using a unique comprehensive dataset on Danish and Swedish biotech start-ups in drug discovery this paper analyzes their research strategies. Adopting a Simonean point of departure we develop a contingency view on complex problem solving which structures the argument into three steps:
1) Characterising the problem architectures addressed by different types of DBFs;
2) Testing and confirming that DBFs form requisite research strategies, by which we refer to problem solving approaches developed as congruent responses to problem architectures;
3) Testing and confirming that financial valuation of firms is driven by achievements conforming to requisite research strategies. These strategies, in turn, require careful combination of multiple dimensions of research.
Findings demonstrate that Shonhoovens classical argument that “strategy matters” is valid not only for the larger high-tech firms covered by her study, but also for small research-based start-ups operating at the very well springs of knowledge where science directly interacts with technologies. Even though a lot more research is needed along these lines, these findings offer new implications for the understanding, management, and financing of these firms.

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Abstract
This paper examines the factors that influence whether firms draw from universities in their
innovative activities. The link between the universities and industrial innovation, and the role of
different search strategies in influencing the propensity of firms to use universities is explored.
The results suggest that firms who adopt "open" search strategies and invest in R&D are more
likely than other firms to draw from universities, indicating that managerial choice matters in
shaping the propensity of firms to draw from universities.
Key words: University-industry links, innovation, external search strategies
JEL Codes: C25, C42, O31, O32

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Interpreting and Learning from the Rise and Decline of the Oticon Spaghetti Organization

Foss, Nicolai J.(Frederiksberg, 2001)

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Resume:

Infusing hierarchies with elements of market control has become a much-used way of
simultaneously increasing entrepreneurialism and motivation in firms. However, this paper
argues that such “internal hybrids,” particularly in their radical forms, are inherently hard to
successfully design and implement, because of fundamental credibility problems related to
managerial promises to not intervene in delegated decision-making ¾ an incentive problem that
is often referred to as the “problem of selective intervention.” This theoretical theme is
developed and illustrated, using the case of the world-leading Danish hearing aids producer,
Oticon. In the beginning of the 1990s, Oticon became famous for its radical internal hybrid, the
”spaghetti organization.” Recent work has interpreted the spaghetti organization as a radical
attempt to foster dynamic capabilities by imposing loose coupling on the organization,
neglecting, however, that about a decade later, the spaghetti organization has given way to a
more traditional matrix organization. This paper presents an organizational economics
interpretation of organizational changes in Oticon, and argues that a strong liability of the
spaghetti organization was the above incentive problem. Motivation in Oticon was strongly
harmed by selective intervention on the part of top-management Changing the organizational
structure was one means of repairing these motivational problems. Refutable implications are
developed, both for the understanding of efficient design of internal hybrids, and for the more
general issue of the distinction between firms and markets, as well as the choice between internal
and external hybrids.

The role of transaction cost economics in developing research in strategy has been a hotly debated topic over the last decade. This paper presents the radical argument that transaction cost insights are more than merely useful complements to existing approaches to strategy. Rather, they are necessary for adequately understanding the nature of strategizing. This is because transaction costs are essential aspects of processes of creating, capturing and protecting value. If transaction costs are zero, these processes do not pose any strategic problems; strategizing is trivialized in such a world. When transaction costs are positive, on the other hand, opportunities for value creation through the reduction of inefficiencies caused by transaction costs exist, and protecting and appropriating value are costly activities that dissipate value. Also, contracting and expectations enter as central aspects of strategizing. Arguments are provided for why economizing (with transaction costs) is more fundamental than strategizing (in the sense of exploiting market power). Thus, the paper argues that models in which the fullest possible account of transaction costs is made be used as the proper foundations and benchmarks for economics-based strategy research, rather than the patched-up competitive equilibrium models that are now used, more or less implicitly, as the benchmark in important parts of strategy research, most notably in the resource-based view.

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The main objective of the paper is to provide an analytical framework based on
evolutionary arguments, explaining the role and rationale of technology policies based
on inter-organisation cooperations. We try to combine different arguments developped
in the literature in order to define a coherent approach of technology policies :
organisational, failure and paradigmatic approaches. We will argue that the role of
technological policies and their design are contingent on whether knowledge creation
emerges in an existing technological paradigm or will be at the origin of a new one.
In the first part of the paper, we will define two broad kinds of cooperative policy :
one (pre-paradigmatic) devoted to create radically new knowledge by exploring new
avenues in order to initiate a new technological paradigm and the other (paradigmatic)
devoted to create new knowledge by using exploitation mechanisms in order to
maintain technological options and variety, inducing innovation and reducing
negative lock-in effects. We specify also for each situation the kind of intervention
(coordination, institutional structure) compatible with the objective of the policy.
In the second part of the paper, we will illustrate our theoretical arguments by
focusing on two types of cooperative programme : one devoted to create a new
knowledge base in a pre-paradigmatic phase (the development of a digital switching
system in France) and the other more devoted to foster knowledge in existing
paradigms (the case of Brite-Euram).

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Ever since its emergence in the 1970s the modern economic or Coasian theory of the firm has been
discussed and challenged by sociologists, heterodox economists, management scholars, and other
critics. This chapter reviews and assesses these critiques, focusing on behavioral issues (bounded
rationality and motivation), process (including path dependence and the selection argument),
entrepreneurship, and the challenge from knowledge-based theories of the firm.

Over the last two decades the resource-based view (“RBV”) has become dominant in the strategic management field. It has often been observed that the RBV is lacking in the dynamic dimension. For example, processes of building competitive advantages by means of combining existing complementary resources in novel ways are not inquired into. We argue that the RBV may profitably draw on insights in entrepreneurship and capital theory, drawn from Austrian economists as well as Frank Knight, in order to strengthen its dynamic dimension. We link the RBV and Austrian ideas in the context of the theory of complex systems pioneered by Herbert Simon. We draw a number of implications for strategic management from this synthesis, notably into resource value and sustainability of competitive advantage.

Learning organizations’ enable companies to remove hierarchical levels and to
introduce a flatter organizational structure, which can lead to reduced costs and increased
productivity. A recent Danish study has proved coherence between a flat, integrative
organizational structure and an increased productivity. This enables a kind of
management in which the managerial form is not as direct as it is in more traditional
structured companies. Value-based management is advanced as a possible answer to the
question of which managerial form that is appropriate for these kind of companies.
In the article, value-based management is described as well as the underlying factors that
are affected by such a managerial form. Required managerial elements in relation to
value-based management are advanced. Examples from Hewlett-Packard are used to
illustrate both the use of value-based management in practice and the underlying factors.